Standard & Poor’s Ratings Services raised Bulgaria’s long-term foreign currency credit rating and its short-term local credit rating, a welcomed announcement for a country on the brink of European Union accession.
The foreign currency sovereign credit rating moved to a ‘BBB’ from ‘BBB-‘. The long-term and short-term local currency sovereign ratings were also raised to ‘BBB+/A-2’ from ‘BBB/A-3’ with a stable outlook. The ‘A-3’ short-term foreign currency remained.
S&P analysis found that the changes are mainly due to the forthcoming EU accession, strong fiscal policy, government debt reduction, large foreign direct investment inflows, as well as rapid and sustainable growth even after the June elections and recent floods.
Under Bulgaria’s accession treaty, membership may be delayed to 2008 instead of 2007, but a one-year delay is not likely to affect the ratings, according to the S&P.
The S&P predicted further credit improvement ratings depend on structural reforms that bolster economic development and underpin the current fiscal strengthening.